>Two questions:
>
>1.) You would agree that this is true, yes? A weak dollar would stimulate
>demand for American exports and help the American economy? A strong dollar
>during the boom helped dampen inflationary pressures?
It's a risky business. Yes, a weaker dollar would help U.S. exports, and, by making imports somewhat more expensive, help push the trade balance in a more favorable direction, but a weaker dollar could also lead to a pullout of capital from the U.S. At its mildest, capital exit would make the Fed less inclined to ease than it would otherwise (keep interest rates high to defend the currency and keep capital from leaving); at worst, it could provoke a full-blown financial crisis.
>2.) Why do you think they are doing this? Do you think this is their honest
>opinion, how they really feel, or do you feel this release is some kind of
>political play? Why would a financial firm ever want their home country's
>currency to go down? Could they have large foreign holdings they'd like to
>get out of? Or do they hope that stimulating demand would bring back the
>stock market?
It could be, and it could be that this is really what they think. The Goldman Sachs economic analysis is a lot more serious than most of the stuff coming out of Wall Street, and it could be that they really believe this.
Doug